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How will the Jet and Etihad deal impact Indian fliers?
India’s Foreign Investment Promotion Board has approved the joint venture between Jet Airways and Etihad Airways, and these two airline companies will be submitting the final agreement, taking into consideration the conditions set by the respective government agencies.
The Jet-Etihad deal is the first foreign direct investment (FDI) in the aviation sector after the government decided to open the sector to foreign carriers last year. The Jet-Etihad deal looks promising from the business angle, but is it beneficial to Indian fliers?
Experts believe that the Jet-Etihad deal will benefit Indian fliers significantly. Etihad Airways has invested Rp 22,902 million (US$ 379 million) in the venture and is taking almost a quarter stake in Jet Airways.
Through this bountiful investment by Etihad Airways, Jet Airways will become India’s largest airline company with a deep pocketed global partner. Also, Jet Airways will be able to use the cash from Etihad’s investment to partly retire debt.
Etihad Airways’ decision to partner with Jet Airways will encourage other foreign airline companies to enter the Indian market. This will increase competition in the Indian aviation sector, leading to better services from existing airlines, and ultimately enhancing customers’ experience.
Also, with an increase in the number of airline companies in the Indian market, airfares are bound to reduce. Airline companies will try to outdo each other by offering high quality services at affordable prices, which will be beneficial to Indian fliers.
As of now, Indian cities are not well connected by flights. People can travel to Tier 1 cities in India with ease. These cities include Hyderabad, New Delhi, Kolkata, Bengaluru, Chennai, Mumbai and Ahmedabad.
However, Tier 2 and 3 cities are not well-connected. So, people travelling to these cities may have to change flights or seek alternative modes of transportation.
These cities are Bhopal, Nagpur, Vishakapatnam, Raipur, Jodhpur, and Chandigarh, to name a few. International passengers find it difficult to travel to these places, which can be addressed with the partnership between Indian and foreign airline companies, similar to the partnership between Jet Airways and Etihad Airways.
Etihad Airways has invested millions of rupees in the partnership and these funds can be used to enhance airports and related infrastructure. Airports will be able to provide better facilities and amenities, thanks to the investments of foreign airlines.
Etihad Airlines brings to the partnership greater connectivity to the world. Prior to the partnership, Jet Airways connectivity with the world was limited, especially in the Middle East.
Since Etihad Airways is the national airline of the United Arab Emirates, it is well-connected to the cities in Middle East, and this is what Jet Airlines can tap on. With Jet-Etihad partnership, passengers will be able to travel to all parts of the world with ease.
In fact, Etihad Airways and Jet Airways have plans of connecting 23 cities in India with 368 destinations in the world. It has been said that through this partnership, passengers will be able to fly non-stop to destinations such as Australia, Europe, and the US.
The partnership between Jet Airways and Etihad Airways is definitely a boon for Indian fliers - they will get to enjoy better services at affordable prices. And with greater connectivity, within and outside India, passengers will be able to travel great distances with ease.
Instead of relying on foreign airlines for better services, Indians will patronise Jet Airways, which will be beneficial for the economy too.